Often, there is a lot of emotion tied up with giving away money, and clients often do not know where or when to start or even how much to give away, noted another panellist, Jason Witcombe, chartered financial planner at Progeny Wealth.
He said: “IHT is not the sort of problem you can sort overnight, it’s much more an ongoing process of gifting.”
“There is a danger that if you try and solve IHT overnight, with a product-based solution that might be a bit complex, the rules then change and you might struggle to undo it,” he added.
“So there’s often not a textbook solution to some of these problems.”
He added that this could see the advice industry becoming “more closely aligned with solicitors” and that this will be happening more.
Also speaking on the panel, Matt Conradi, head of advice at Netwealth, reiterated that clients generally are most frustrated by the sheer complexity of IHT.
He also noted that older clients are increasingly worried about care home fees, and whether they are going to live longer than they expect, and pointed out the impact of clients generally underestimating their own life expectancy.
He explained: “The reality is that the average person only stays in care for about 30 months, so it is about quantifying that risk and how it fits into their setup.
“For some clients, where the majority of the wealth is in a proxy, that’s going to potentially be an issue,” he added.
For example, he said those clients that can maintain assets in a pension and draw from it but also maintain some other objectives about passing wealth on, would be in a much better place.
More money than ever is being passed down to future generations, and HM Treasury has forecast it will take £6.9bn in IHT receipts by 2024, pointed out Nick Bird, senior business development manager at Octopus Investments, also speaking at the event.
The challenge, he said, is that some 80 per cent of beneficiaries do not know who their parents’ adviser is.
And so it is important advisers build a relationship with clients’ beneficiaries, explain the estate planning that has been done for them, and provide holistic family service by being there to support their loved ones when they pass away, he explained.
Reducing the IHT burden
All advisers can do is give advice, with the best intentions, based on today’s rules, knowing that there could very well be significant changes to the rules in the future, said Mr Witcombe.
“You have to explain those risks to clients and understand where they balance with their other objectives,” he said.
